Dim Sums: Agricultural Markets in China

While the rest of the world is focused on how China's "belt and road" initiative saddles developing countries with unsustainable debt to finance grand construction projects, China has been doing the same thing in its own countryside. The public works, environmental protection, and beautification projects built by the country's rural revitalization campaign have visibly improved China's rural landscape, but the village debt problem is mostly hidden from view. A Xinhua Semi-monthly Talk article warned that "star villages" and "model villages" had been visibly transformed but piled up excessive debts in the process. The article gave the example of a "national civilized village" in a mountainous region that built a culture square, a primary school, kindergarten, a day-care center for the elderly, and a 3500-meter retaining wall that transformed the village but left it deep in debt. Another village owed 1.38 million yuan for a well and ...

Chinese officials acknowledged that African swine fever (ASF) is still a risk for the country's pork industry as they launched crackdowns, testing, and record-keeping initiatives to control the virus last week. The new initiatives are the first acknowledgement of continuing disease risk by Chinese officials who have been urging the industry to undertake a crash program to restore normal pork supplies by next year. On May 21, the Ministry of Agriculture and Rural Affairs (MARA) issued " Guidance on strengthening measures to control African Swine Fever " that laid out a dozen measures meant to establish the prevalence of the virus and to shore up lax reporting, testing, record-keeping, and regulation at the grass roots level. The measures implement a directive issued by the State Council last year to strengthen ASF prevention and control.  A MARA veterinary official explained that the measures are necessary because it is not easy to control disease in China's huge, ...

Covid-19 has reversed China's rural migrant flow, as at least 50 million people returned to their villages in 2020. The countryside is once again serving its historic role as a reservoir for underemployed people. China's national urban unemployment rate was reported to be 6.2 percent in February 2020 and 5.9 percent in March, at the peak of the country's covid lockdown. However, much of China's unemployment may be hidden after a significant proportion of the labor force dispersed to the countryside. China's first quarter 2020 statistics showed that the rural migrant workforce was estimated at 122.5 million at the end of February 2020, nearly 52 million less than the 2019 total reported by the National Bureau of Statistics in its annual migrant worker statistics released April 30, 2020. Wages were also down. The average monthly earnings for migrant workers reported for Q1 2020 was 3,680 yuan, 747 yuan less than the 2019 average. Multiplying these figures sugg...

China has piled up mountains cash in some of world's biggest banks, but officials are relying on commercial companies to come up with the cash to invest in an initiative to overhaul the countryside--one of China's top priorities for 2020. Last month the Ministry of Agriculture and Rural Affairs (MARA) published a document to "guide" more commercial investment into rural industries and infrastructure  as they watched rural investment plummet this year. An April 30 Q&A published by MARA  explains the targets for rural investment and the inducements for investors. A MARA official explained that "social capital" (non-governmental investment) accounts for 80 percent of rural investment and is therefore necessary to build infrastructure, overhaul the agricultural sector, offer services to farmers, and to create rural industries. Commercial investment also brings technology, personnel, and management needed to build modernized agriculture and rural business....

Chinese customs authorities have been announcing seizures of smuggled meat products. This crackdown began in 2019 and seems to reflect a surge in smuggling prompted by a spike in Chinese meat prices last year that increased the trade's profitability. The inspection bureau of the Huangpu port in Guangzhou says it has arrested 36 suspects and seized 4582 metric tons of frozen beef, chicken feet, and pork stomachs in a six-month crackdown. Customs and police jointly mobilized 458 officers to conduct 62 operations in Guangzhou, Dongguan, Shantou, Shenzhen and Guilin over the past six months. They arrested 36 suspects, bringing down this "huge gang" "in one fell swoop." Officials say a suspect received shipments of beef in Hong Kong, then transferred them to ports in Guangdong and stored them in warehouses. Customs inspectors say they saw large amounts of meat in boxes with foreign labels stored in a warehouse with fraudulent documents and inspection certificates,...

Are Chinese soybean prices going up or going down? Yes. Prices for China-grown soybeans have risen faster than any other major commodity in China this year, but imported soybeans remain a bargain for the country's processors. The price of the no. 1 soybean contract on China's Dalian futures exchange is up 40 percent since the beginning of 2020, but the price for the no. 2 soybean contract is down 16 percent. At least one Hong Kong journalist has misinterpreted the price increase as an indicator of disrupted supplies of imported soybeans. While imports from Brazil were down 12% during April , huge volumes are expected to arrive next month. The price of imported soybeans in China has fallen to near 3000 yuan/metric ton, a level not seen since 2016. The no. 1 soybean contract specifies delivery of non-genetically modified soybeans, but the no. 2 contract does not have this restriction. Since GMO soybeans cannot be legally grown in China, the no. 1 soybean contract reflects ...

The United States exported a record volume of pork to China in the first quarter of 2020. China's purchases soared as the impacts of an African swine fever epidemic took hold. China pork prices were already about double those in the United States a year ago when farmers were killing their pigs en masse to avoid the disease. Prices in China soared to quadruple the level of U.S. prices in October 2019. Prices spiked again in February during China's peak-covid month when most slaughterhouses were closed and farmers in blockaded villages could not market their hogs. Chinese pork prices have fallen since then, but they are still triple the level of U.S. prices. Annual production and consumptions statistics do not measure China's pork supply-demand deficit precisely because the deficit did not become apparent until the second half of 2019. Monthly slaughter numbers issued by the Ministry of Agriculture and Rural Affairs (MARA) show that the gap between monthly 2019 slaughte...

The gap between Chinese and U.S. corn prices has been widening. Chinese officials are rumored to be contemplating big purchases to take advantage of the discount U.S. corn, restock reserves, and make some movement toward their Phase one purchase commitments. China's corn prices have been on the rise as the country emerges from covid-19 lockdown, while U.S. prices have tanked in sync with the plunge in petroleum prices and the disruption of the U.S. economy. The May 2020 futures price on China's Dalian exchange rose a cumulative 7 percent from January to the end of April, while the May futures contract in Chicago plummeted 23 percent in March and April. A modest 2-percent depreciation of the Chinese yuan against the dollar during China's covid peak magnified the difference in prices. The Dalian price rose to the equivalent of about $7.35 per bushel at the end of April while U.S. corn futures price fell to around $3.10 per bushel. Spot prices reported by BRICS market co...